EXCISE TAX ON RECEIPT OF GREENMAIL.

SEC. 10228. EXCISE TAX ON RECEIPT OF GREENMAIL. (a) In General.— Subtitle E is amended by adding at the end thereof the following new chapter: “CHAPTER 54— GREENMAIL “Sec. 5881. Greenmail. “SEC. 5881. GREENMAIL. “(a) Imposition of Tax.— There is hereby imposed on any person who receives greenmail a tax equal to 50 percent of gain realized by such person on such receipt. “(b) Greenmail.— For purposes of this section, the term ‘greenmail’ means any consideration transferred by a corporation to directly or indirectly acquire its stock from any shareholder if— “(1) such shareholder held such stock (as determined under section 1223) for less than 2 years before entering into the agreement to make the transfer, “(2) at some time during the 2-year period ending on the date of such acquisition— “(A) such shareholder, “(B) any person acting in concert with such shareholder, or “(C) any person who is related to such shareholder or person described in subparagraph (B), 101 STAT. 1330–418made or threatened to make a public tender offer for stock of such corporation, and “(3) such acquisition is pursuant to an offer which was not made on the same terms to all shareholders. For purposes of the preceding sentence, payments made in connection with, or in transactions related to, an acquisition shall be treated as paid in such acquisition. “(c) Other Definitions.— For purposes of this section— “(1) Public tender offer.— The term ‘public tender offer’ means any offer to purchase or otherwise acquire stock or assets in a corporation if such offer was or would be required to be filed or registered with any Federal or State agency regulating securities. “(2) Related person.— A person is related to another person if the relationship between such persons would result in the disallowance of losses under section 267 or 707(b). “(d) Tax Applies Whether or Not Gain Recognized.— The tax imposed by this section shall apply whether or not the gain referred to in subsection (a) is recognized.” (b) Denial of Income Tax Deduction for Greenmail Tax.— Paragraph (6) of section 275(a) is amended by striking out “and 46” and inserting in lieu thereof “46, and 54”. (c) Clerical Amendment.— The table of chapters for subtitle E is amended by adding at the end thereof the following new item: “Chapter 54. Greenmail.” (d) Effective Date.— The amendments made by this section shall apply to consideration received after the date of the enactment of this Act in taxable years ending after such date; except that such amendments shall not apply in the case of any acquisition pursuant to a written binding contract in effect on December 15, 1987, and at all times thereafter before the acquisition.